Surendra Kumar Banka, Kolkata V. ACIT, Circle-39, Kolkata, Kolkata

ITA 2040/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4402 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 03-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2014
• Court: TRIBUNAL
• Department Lawyers: DINBANDHU NASKAR
• Assessee Lawyers: ARVIND AGARWAL ADCOATE
• Keywords: Retraction

Judgement Text

I.T.A. NO. 2040/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 2040/KOL/ 2014 ASSESSMENT YEAR: 2010-2011 SURENDRA KUMAR BANKA,.............................. ........................APPELLANT G.P. AGRAWAL & ASSOCIATES, 7A, KIRAN SHANKAR ROY ROAD, 2 ND FLOOR, KOLKATA-700 001 [PAN: ADIPB 6124 D] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ..............RESPONDENT CIRCLE-39, KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTIPALLY, 8 TH FLOOR, KOLKATA-700 107 APPEARANCES BY: SHRI ARVIND AGARWAL ADCOATE, FOR THE ASSESSEE SHRI DINBANDHU NASKAR, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 03, 2016 DATE OF PRONOUNCING THE ORDER : OCTOBER 04, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOLKATA DA TED 26.08.2014 AND THE SOLITARY ISSUED INVOLVED THEREIN RELATES TO THE ADDITION OF RS.3,08,369/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF DIFFERENCE IN VALUATION OF STOCK. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE WHOLESALE BUSINESS OF POLYESTER FILM, PRINTING INK AND ADHESIVE, MARBLE AND SANITARY FITTINGS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 08.10.2010 DECLAR ING TOTAL INCOME OF RS.19,09,710/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE CLOSING S TOCK AS FOUND IN THE I.T.A. NO. 2040/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 5 SURVEY CARRIED OUT AT THE PREMISES OF THE ASSESSEE AS ON 30.03.2010 WAS RS.39,04,799/-, WHILE THE SAME WAS SHOWN BY THE ASS ESSEE IN THE BALANCE- SHEET AS ON 31.03.2010 AT RS.64,94,037/-. WHEN THE ASSESSEE WAS CALLED UPON BY THE ASSESSING OFFICER TO EXPLAIN THIS DIFFE RENCE, A STATEMENT WAS FILED BY THE ASSESSEE TO RECONCILE THE SAID DIFFERE NCE AS UNDER:- CLOSING STOCK AS ON 30.03.2010................... .................RS.35,96,430.04 (I.E. DATE OF SURVEY) ADD. MATERIAL RECEIVED AS ON 31.03.2010........... ........RS.28,94,616.30 ______________________ RS.64,91,046.34 ADD. STOCK OF TILES, MARBLES AND SANITARY FITTINGS .. RS. 1,72,577.00 ______________________ RS.6,63,623.34 LESS: SALES RS.1,85,568.67 ______________________ RS.64,78,054.67 TOTAL CLOSING STOCK AS PER AUDITED BALANCE SHEET.. ...RS.64,94,037.48 3. ALTHOUGH THE RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE WAS FOUND TO BE SUBSTANTIALLY CORRECT BY THE ASSESS ING OFFICER ON VERIFICATION OF THE RELEVANT RECORD, HE FOUND THAT THE STOCK AS ON 31.03.2010 WAS TAKEN BY THE ASSESSEE IN THE SAID RE CONCILIATION AT RS.35,96,430/- AS AGAINST THE STOCK AS FOUND AND VA LUED DURING THE COURSE OF SURVEY AT RS.39,04,799/-. THIS DIFFERENCE OF RS. 3,08,369, THEREFORE, WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ADDITION OF RS.3,08,369/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF DIFFERENCE IN VALUE OF STOCK WAS CHALLEN GED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND TH E FOLLOWING SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE BEFORE THE LD. C IT(APPEALS) IN SUPPORT OF HIS CASE ON THIS ISSUE:- A SURVEY WAS CONDUCTED ON MY BUSINESS PREMISES ON 30/03/2010 WHEN THE STOCK WAS PHYSICALLY VERIFIED A ND VALUED AT AVERAGE COST AMOUNTING TO RS.39,04,799/-. IN THE COURSE OF STATEMENT RECORDED AT THE TIME OF SURVEY; IN REPLY TO QUESTION NO. 8 (THE VALUE OF STOCK HAVE BEEN TAKEN AT COST. PLEASE COMMENT; IF ANY) I HAD STATED ''SINCE MY ACCOUNTANT IS NOT PRESENT; I AM NOT IN A POSITION TO COMMENT ON THIS ISSUE. I.T.A. NO. 2040/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 5 I WAS THEREAFTER NEVER CALLED UPON TO EXPLAIN THE S AME EXCEPT IN THE COURSE OF ASSESSMENT PROCEEDINGS WHEN I FILE D A STATEMENT SHOWING VALUATION AT COST (F.I.F.O. BASIS ) AS ON 30/03/2010 DETERMINING THE VALUE AT RS.35,96,430/-( COPY ENCLOSED). I ALSO FILED A STATEMENT SHOWING RECONCILIATION OF CLOSING STOCK AS ON 30/03/2010 (I.E. DATE OF SURVEY) AND AS ON 31 /03/2010 WHICH IS REPRODUCED IN PAGE NO 2 OF THE ASSESSMENT ORDER. IT MAY BE OBSERVED FORM THE SAID RECONCILIATION THAT T HE CLOSING STOCK AS PER AUDITED ACCOUNT HAS BEEN CONSIDERED AS RS.64,94,037/- AS AGAINST RS.64,78;055/- AS PER THE SAID RECONCILIATION VALUING STOCK AS ON 30/3/2010 AT COS T (F.I.F.O. BASIS). THIS ESTABLISHES THAT THE VALUATION MADE BY ME FOR STOCK AS ON 30/3/2010 & 31/03/2010 IS CORRECT AND NO ADDI TION SHOULD HAVE BEEN MADE ON THIS ACCOUNT. 5. THE ABOVE SUBMISSION MADE BY THE ASSESSEE WAS NO T FOUND ACCEPTABLE BY THE LD. CIT(APPEALS) AND HE PROCEEDED TO CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F DIFFERENCE IN STOCK FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORD ER:- IN THE INSTANT CASE, A SURVEY OPERATION TOOK PLACE ON 30/03/2010 AND AFTER MORE THAN SIX MONTHS ON 08/10/2010 THE APPELLANT FILES ITS RETURN OF INCOME WHEREIN IN ITS BALANCE SHEET THE CLOSING STOCK WAS REFLECTED AT RS.35,96,430/- AS AGAINST A CLOSING ST OCK OF RS.39,04,799/- DETERMINE DURING THE COURSE OF THE S URVEY. FOR MORE THAN SIX MONTHS THE APPELLANT ACCEPTED THE VALUE OF THE CLOSING STOCK AS DETERMINE DURING SURV EY AND THEREAFTER WHILE FIL,ING THE RETURN OF INCOME, RETR ACTED. I ALSO FIND THAT DURING SURVEY THE APPELLANT HAD STAT ED THAT HE IS NOT IN A POSITION TO COMMENT ON THE VALUE OF THE STOCK IN THE ABSENCE OF HIS ACCOUNTANT. THERE IS NO REASON WHY THE APPELLANT COULD NOT CLARIFY THE VALUATION O F THE STOCK IMMEDIATELY AFTER THE SURVEY. IT APPEARS FROM THE BEHAVIOUR OF THE APPELLANT THAT THE VALUATION MADE DURING SURVEY WAS ACCEPTABLE TO HIM FOR MORE THAN S IX MONTHS. SUCH A BEHAVIOUR ACTUALLY AMOUNTS TO ADMISS ION BY THE APPELLANT OF THE VALUATION AND ADDITIONS MAD E ON THE BASIS OF ADMISSIONS ARE JUSTIFIED (HIRA SINGH & CO. -VS- CIT (HP) 230 ITR 791). UNDER THESE CIRCUMSTANCES, I AM NOT PREPARED TO ACCEPT RETRACTION MADE BY THE APPEL LANT WHILE FILING THE RETURN OF INCOME. THE ADDITION TO THE EXTENT OF RS.3,08,369/- MADE BY THE A.O. IS CONFIRM ED. I.T.A. NO. 2040/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 5 AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 6. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE IMPUGNED ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK WAS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) MAINL Y ON THE BASIS OF VALUATION OF STOCK AS MADE DURING THE COURSE OF SUR VEY WHICH WAS ACCEPTED EVEN BY THE ASSESSEE. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE VALUATION OF STOCK DURING THE COURSE OF SURVEY WAS MADE ON AVERAGE COST BASIS AS AGAINST FIFO BASIS CONSISTENT LY ADOPTED BY THE ASSESSEE. HOWEVER, THE ACCOUNTANT OF THE ASSESSEE W AS NOT PRESENT AT THE TIME OF SURVEY AND, THEREFORE, THIS FINE DIFFERENCE COULD NOT BE POINTED OUT BY THE ASSESSEE. THIS POSITION WAS ALSO MADE BY THE ASSESSEE VERY CLEAR IN HIS STATEMENT RECORDED DURING THE COURSE O F SURVEY WHILE GIVING REPLY TO THE QUESTION NO. 8. IT APPEARS THAT THE AU THORITIES BELOW, HOWEVER, COULD NOT APPRECIATE THIS POSITION AND PRO CEEDED TO ADD THE DIFFERENCE OF RS.3,08,369/- TO THE TOTAL INCOME OF THE ASSESSEE WITHOUT EVEN VERIFYING THE CLAIM OF THE ASSESSEE OF HAVING FOLLOWED THE FIFO METHOD CONSISTENTLY FOR VALUATION OF STOCK. HAVING CONSIDERED ALL THESE FACTS OF THE CASE, I AM OF THE VIEW THAT THE ADDITI ON MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON AC COUNT OF SUCH DIFFERENCE IS NOT SUSTAINABLE AND DELETING THE SAME , I ALLOW THIS APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 04, 2 016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 4 TH DAY OF OCTOBER, 2016 I.T.A. NO. 2040/KOL./2014 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 5 COPIES TO : (1) SHRI SURENDRA KUMAR BANKA, G.P. AGRAWAL & ASSOCIATES, 7A, KIRAN SHANKAR ROY ROAD, 2 ND FLOOR, KOLKATA-700 001 (2) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-39, KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTIPALLY, 8 TH FLOOR, KOLKATA-700 107 (3) COMMISSIONER OF INCOME TAX(APPEALS)-IV, KOLKA TA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.